- The Supreme Court on Tuesday gave its verdict on the Lone Moratorium case.
- The Supreme Court said that a full interest waiver is not possible as it will directly affect depositors.
- Along with this, the Supreme Court also refused to extend the term of the loan moratorium.
- The Supreme Court has also said that compounding interest will not be charged during this period.
New Delhi: The Supreme Court on Tuesday gave its verdict on the Lone Moratorium case. The Supreme Court said that full interest waiver is not possible as it will directly affect depositors. With this, the Supreme Court also refused to extend the loan moratorium period, but the good thing is that compound interest will not be charged during this period. Let’s know the answers to some questions related to the Lone Moratorium.
Will interest still be paid on interest?
Compound interest will not be charged as per the Supreme Court verdict. This simply means that you will not have to pay interest on interest. This decision is a major relief in the Lone Moratorium case.
What relief has been provided by the Supreme Court?
The Supreme Court’s decision has come in keeping with the interests of the common man. The Supreme Court has refused to exempt from full interest, as it would harm depositors. The second relief is not the interest charged on the interest.
How long will the loan moratorium benefit?
The Supreme Court has refused to extend the term of the loan moratorium. That is, this period will remain the same as before. In order to reduce the impact of the virus in the Corona era, the Reserve Bank of India (RBI) had asked lending institutions to provide moratorium facilities on loan repayment. This facility was earlier being extended on loans given between 1 March 2020 to 31 May 2020, which was later extended to 31 August 2020.
Why did the Supreme Court not provide financial relief?
The Supreme Court has not granted any financial relief in the loan moratorium case. The court also said that there is limited scope for judicial review on economic policy decisions. The court will not debate academic matters of trade and commerce. It is not our job to decide that public policy could have been better. The policy cannot be canceled on the basis of better policy. The court said that the government decides the economic policy based on the opinion of the RBI expert.
What is the matter of loan restructuring in loan moratorium?
The Reserve Bank had allowed all banks to restructure the loan once, that too without putting that loan in the NPA. This was done to help companies and individuals fight financial troubles during the Corona epidemic.
What was the qualification for loan restructuring?
Only those companies or individuals whose accounts were not in default status for more than 30 days till March 1, 2020 were eligible for this loan restructuring. In the case of companies, the resolution plan was to be prepared by 31 December 2020 and implemented by 30 June 2021. In the case of personal loans also, the resolution plan was to be prepared by 31 December 2020, but it was to be implemented within 90 days.
How many rupees were available on the loan?
The government had announced a waiver of interest on interest during the Moratorium to the borrowers of up to Rs 2 crore. According to the government, in 6 months loan moratorium time, the interest on the loan interest of up to two crore rupees will be waived. This facility was given for 8 categories, which are MSME loans, education, housing, consumer, auto, credit card dues and consumption loans.
